Foxtel revenue increases on healthy subscriptions

Foxtel
chief executive
Richard ­Freudenstein
insisted he was “broadly indifferent" to the broadband policies of Labor versus those of the Coalition, as the pay television provider reported its strongest subscriber growth in four years, fuelled by cheap internet television offers.

Mr Freudenstein was responding to claims by Prime Minister
Kevin Rudd
that Foxtel’s 50 per cent shareholder
News Corp
opposes the NBN because it thinks Labor’s project poses a commercial threat to its pay TV interests.

But speaking to The Australian Financial Review, Mr Freudenstein said Foxtel services would ride on the back of other internet service ­providers over the 100 megabits a ­second network, making it a major ­beneficiary over the project despite new competition in IPTV.

“I’m not sure the NBN changes the dynamic that much, because our services currently take up about three megabits a second and most metro broadband operators have way more than that already, so the competition is already there," he said. “There is obviously going to be more competition, but as long as it’s a level playing field we are very happy to compete."

Asked whether he preferred the Coalition’s cheaper but slower alternative proposal for a national broadband network he said: “It’s probably not appropriate for me to comment on any of the policies but in any event there will be an NBN and we will be using it."

His comments came as Foxtel reported a 3.9 per cent rise in revenues to $3.1 billion in the year to June on a pro forma basis. Its other 50 per cent shareholder
Telstra
said the rise was supported by “a 3.4 per cent increase in subscribers to 2.5 million".

It put this down largely to improvements in churn rates, which were down 2 percentage points to 14.2 per cent.

Earnings up

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Telstra reported Foxtel had enjoyed “good growth" in subscribers using the service over Telstra’s copper network, as opposed to satellite or cable.

Earnings before interest, depreciation, tax and amortisation were up 22.4 per cent to $944 million after “significant cost synergies from the Austar integration". It was Foxtel’s first full year of reported results since its acquisition of regional pay TV player,
Austar
.

Mr Freudenstein admitted the company was unlikely to repeat such a strong profit performance, but he was bullish on subscriber growth.

Telstra said revenue in premium PayTV, where Foxtel premium services are resold through Telstra, was down 1.2 per cent to $595 million. Foxtel starts a marketing blitz this Sunday for Foxtel Play, its new internet service aimed at younger users, with packages starting at $25 a month.